The drama surrounding the ownership of The Ritz-Carlton, Grand Cayman properties ended Friday as the Cayman Islands government agreed to transfer them to new owners, RC Cayman Holdings LLC and its related companies.
It was unclear Friday whether a separate valuation of the land and buildings involved in the sale had ever been done by government, as was proposed by former Premier McKeeva Bush. Since the newly elected government had not taken shape by Friday, it was assumed the property transfer had been given the green-light by the outgoing administration.
An announcement by representatives of Five Mile Capital Partners and RC Cayman Holdings LLC released on Friday evening did not specify.
“The Cayman Islands government, having considered all relevant information, has decided to adhere to the agreement it had reached with Five Mile’s valuer, Charterland, last October and accept the payment it received last December as full and final payment on the stamp duties incurred in relation to the [property] transfers,” the announcement read.
The Ritz property was sold at auction to Five Mile Capital subsidiaries for US$177.5 million in what was believed to be the largest value property sale in the Cayman Islands’ history.
However, former Premier Bush and his administration questioned whether the sale price for the hotel and adjacent properties was “artificially low” and demanded that another valuation be conducted so that the government could collect more stamp duty on the purchase. During a mid-November statement in the Legislative Assembly, Mr. Bush said the US$177.5 million purchase price was far lower than the US$468 million value assigned by an appraiser in 2007, and that government’s Senior Valuation Officer Uche Obi had said in his opinion the hotel and property were worth more than US$500 million.
The interim government continued to seek the revaluation of the property following Mr. Bush’s ouster on 18 December, 2012.
In January, Premier Juliana O’Connor-Connolly said the government Lands and Survey Department was performing its own internal valuation of The Ritz-Carlton property, which sold for the reserve price at the auction and the value assigned by new owner RC Cayman’s local surveying firm.
“It is a complex and technical valuation. One that they’re competent of doing, but not one you get during the everyday round of business. Once I receive that valuation I have confidence in the Lands and Survey Department that the valuation that comes forward will be one I will take to my Cabinet, as a note, so that they will be privy to what the valuation says. And I believe that will be enough position then to make a more considered decision,” Ms O’Connor-Connolly said in January.
RC Cayman Holdings LLC filed the second of two legal actions in March against Cayman Islands officials, seeking to prevent another evaluation of the property for stamp duty purposes.
The latest “Application for Leave to Apply for Judicial Review” was filed 27 March in the Cayman Islands Grand Court in response to the government’s chief valuation officer notifying the purchasers on 22 March that he was seeking two further valuations of the property from unidentified valuers. The results of either of those valuations were never made public, the Caymanian Compass understands.
The general election held in Cayman on Wednesday removed both Mr. Bush’s United Democratic Party and the interim government led by Ms O’Connor-Connolly from power. The election results placed the People’s Progressive Movement in the driver’s seat with nine elected members, but by Friday no new government had formed because the PPM remained one seat shy of the legislative majority.
Officially, the interim government led by Premier O’Connor-Connolly remains in office until the new government is formed.
According to the statement sent out by Five Mile Capital: “The new owners of the property recognise the importance of The Ritz-Carlton, Grand Cayman hotel to the local tourism industry and are pleased that the transfers will allow them to focus on maximising the operation and business of the hotel including over $13.5 million in approved capital expenditures.
“In addition to the $13.5 million, ownership is also exploring opportunities to build out approximately 20,000 square feet of currently unfinished space in one of the ocean towers, and upgrades to marina/water sports and golf operations. With a strong leadership team in place, the hotel refurbishment and operations as well as other improvements will continue without interruption.”